MBH Analysis Center: The Hungarian economy may accelerate again in 2026, but the Iranian war carries serious risks

The full Macroeconomic Outlook of the MBH Analysis Center is available at this link.

As for recent developments in the real economy, last year the main pillar of growth was still the services sector, supported by recovering consumption and improving consumer confidence, while industry continued to be a drag due to weak external demand. reported. In 2025, growth is expected to be only 0.4 percent for the whole year.

“This year we can see a significant turnaround in growth: in the basic case, we expect GDP growth of 2.3 percent in 2026, which could be followed by growth of over 3 percent in 2027. If the conflict in the Middle East permanently increases energy prices and keeps investors’ risk-averse behavior high, then growth could be slower than this”

– said Zoltán Árokszállási, Director of the MBH Analysis Center.

The labor market picture is mixed, but stabilization is in sight

In the last months of 2025, the number of employed people decreased rapidly, while the unemployment rate did not increase significantly, rather the inactivity rate increased. With a rate of 4.4 percent measured in December, unemployment practically stagnated, but rose in January.

“We do not expect a significant decrease in the unemployment rate this year, we expect an average level of 4.4 percent in 2026. The labor market typically reacts with a delay to economic processes, so the acceleration of growth may bring improvement in this market from the second half of the year”

– added Márta Balog-Béki, senior analyst at MBH Analysis Center.

The situation in the Middle East may have a fundamental impact on the labor market later. The rise in gas and oil prices may put pressure on companies due to increasing corporate overhead costs and transportation costs. In such a situation, one of the means of cost reduction may be workforce reduction or the wider use of part-time employment. Since it would also be beneficial for world trade if the supply of oil and gas were to operate smoothly, analysts believe that there is a chance of some kind of agreement before these factors have a significant impact on the domestic labor market.

Inflation may remain below 3 percent for a few months

Inflation trends became increasingly favorable towards the end of last year, and January data already showed that inflation may remain permanently below the central bank’s 3 percent target in the coming months. The extension of the margin freeze until the end of May will further curb the rise in food prices, and its future elimination is expected to have only a moderate impact on inflation, partly due to the price monitoring system and partly due to improving purchasing conditions. “Price pressures are more moderate than we expected, which is why we have reduced our 2026 inflation forecast from 3.5 percent to 2.9 percent. Despite wage increases and transfers, corporate pricing behavior has remained restrained, which is an encouraging sign” – highlighted Márta Balog-Béki.

However, the conflict in the Middle East may also worsen the inflation picture through fuel prices and the weakening forint. The pricing of household fuel does not directly derive from the price of crude oil, so the full extent of the oil price increase will not be reflected at gas stations in the first round, but the effect could still lead to a significant increase in prices (20-30 forints per liter) – to which the weakening of the forint may also contribute. In the event of de-escalation, however, fuel prices may even fall back after a short increase, and then the temporary weakening of the forint would not have a price-raising effect either.

When the MNB can cut again depends on the Iranian situation

The better-than-expected inflation in January made it possible to cut interest rates in February, so after a year and a half of stagnation, the key rate fell to 6.25 percent. The market subsequently priced in the continuation of interest rate cuts in March, but due to the Iranian conflict, it is not ruled out that the MNB will wait and see, said experts from the MBH Analysis Center.